ACCC to police carbon price rorts

The competition regulator will gain new authority to investigate price gouging and prosecute companies under a Gillard government plan to assuage consumer fears about unfair price rises during the introduction of the carbon tax.

Thousands of companies would come under scrutiny and many would face court action for breaches of consumer laws under the government strategy to replicate the pricing crackdown that accompanied the introduction of the goods and services tax a decade ago.

The plan comes as the government prepares to release the details of its carbon pricing scheme on Sunday after assuring voters that household spending on petrol would be excluded.

But Prime Minister
Julia Gillard
’s assurance on petrol triggered another political row as the Coalition challenged Labor to confirm The Australian Financial Review’s report that business would face higher fuel costs under the climate change reforms.

Ms Gillard and her ministers would not say whether businesses with heavy vehicles – such as farmers, transport companies and miners – would have to pay more for fuel, deepening fears in the business community about the changes.

Business sources warned yesterday that if the government reduced fuel concessions for industry, it would offend a key principle in the tax ­system that business inputs should not be taxed.

The carbon pricing scheme is being finalised over the next few days in ­further meetings of the Multi-Party Climate Change Committee, with Sunday emerging as the most likely day for the full details to be announced.

Ms Gillard said her assurance on the exclusion of petrol meant that Mr Abbott should apologise for misleading voters by repeatedly claiming in recent months that petrol prices would rise under the carbon tax.

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The Prime Minister insisted household petrol purchases would be exempt “now or in the future" but the Coalition seized on a statement from Greens deputy leader
Christine Milne
that “you never say never, ever" in politics and a comment from independent MP
Tony Windsor
that the Gillard government could not bind future governments on the matter.

Mr Abbott last night claimed credit for forcing the government to exempt petrol.

“Do you really think that petrol would be excluded had I not been campaigning hard to protect the motorists of Australia from this hit on their cost of living?" he said.

The Coalition challenged the government’s petrol price commitment by demanding a similar guarantee on the fuel costs for business, using question time to demand answers from Ms Gillard, Treasurer
Wayne Swan
and Assistant Treasurer
Bill Shorten
.

But the government would not ­clarify whether businesses such as transport operators or miners would lose some of their fuel excise concessions as part of the shift to the carbon pricing scheme.

The Financial Review revealed yesterday that companies would face an implicit carbon price by losing concessions, adding to business costs.

Transport Workers Union federal secretary
Tony Sheldon
said his members were unhappy about the fuel cost impact on road transport businesses and were considering “civil disobedience" to get more relief for owner-drivers and trucking companies already under cost pressure.

Behind the campaign against pos­sible price gouging when the carbon tax is being implemented is the government’s concern that retailers and other companies could use the new tax as an excuse to increase prices, a trend that would punish consumers.

The government intends to confer heightened authority on the Australian Competition and Consumer Commission and to give it an expanded role to act on complaints about prices, easing shoppers’ concerns about the tax. The authority would not need to be a legislative amendment and could take the form of pricing guidelines or a direct request to the regulator to monitor the impact of the carbon tax.

Government sources confirmed the plan, saying the aim was to ensure prices rose by the same amount as the carbon tax and no further, ensuring that nine out of 10 households would be fully compensated.

The plan is based on the ACCC’s actions during the introduction of the GST, when then commission chairman Allan Fels named and shamed companies that charged consumers too much. He publicly rebuked companies, took several to court and extracted legal undertakings from dozens of others, including arrangements to repay consumers who ­suffered from the price exploitation.

One source said the Gillard government was determined to have the same safeguards in place when the carbon tax begins from July 2012. Another source said the ACCC would be given an expanded role to investigate and take action against companies for breaches of consumer laws.

It is also expected to run educational and information programs including providing companies and consumers with guidelines on how the new carbon pricing system will work.

The price surveillance would mirror the ACCC’s investigations during the introduction of the GST, when thousands of companies were investigated for price gouging. Professor Fels used toughened competition laws to force companies to take out advertisements admitting to price exploitation and in some cases repay millions of dollars to consumers.

Central to the campaign was the introduction of GST pricing guidelines aimed at preventing companies imposing hidden costs on consumers.

The regulator investigated 120,000 cases of potential non-compliance with the GST pricing guidelines in the first two years. While many were found not to be breaches, the inquiries caused significant stress for companies under investigation.

The government is considering ­similar pricing guidelines that would empower the ACCC to crack down on companies that raise prices too high.

The government is expecting a well- funded advertising campaign by ­mining and some business groups.

The Minerals Council of Australia’s advertising campaign against the resource rent tax last year forced Labor to modify its plans.

The Gillard government is planning to counter the campaign with its own, similar to that used at the time of the GST, when the ACCC used print, radio and TV ads to put companies on notice about the price investigations.

The government has also ­con­sidered payment measures to ensure that its compensation for households is as visible as possible.

The scheme will move from a fixed carbon price after three years to an emissions trading scheme. It will include compensation for householders with just over 50 per cent of the revenue raised targeted at low to middle income earners, with some receiving more than the scheme is estimated to cost them. The scheme is also expected to include spending on renewable energy and energy efficiency projects.

Mr Abbott rejected the suggestion that he was putting his own political advantage ahead of good policy in the national interest, saying he believed in being pragmatic.

But he would not disclose how an Abbott government would find savings in the budget to pay for his direct action policy to buy emissions reductions at a cost of $10.5 billion over a decade.

“I accept that everything has a cost but we will spend roughly $1 billion a year from savings in the budget to buy emissions reductions," he said.

“The government is going to hit people with what we think is going to be about $11 billion a year in extra costs in the economy."